Stipp: 4% of GDP is the projected deficit this year from the CBO, and that is a big improvement.

Glaser: It is. The Congressional Budget Office, which is the nonpartisan group that works with Congress to crunch some of these numbers, says that we're going to see a deficit this year of 4% of GDP, down big from the 10.1% that we saw in 2009 at the height of the recession.

What's driving this is higher revenues from higher tax rates, an improving economy, less spending due to sequestration, and other cuts that the Congress has passed. And finally, some one-time issues, like Fannie and Freddie, are going to be paying more to the Treasury than expected thanks to the housing recovery.

The CBO thinks over the short term, deficits could shrink even more under current law. Right now, they are predicting 2.1% of GDP in 2015, below that 2.4%, which was the 40-year average before the recession, before 2008, and you should take that number with a huge grain of salt. The CBO moves these numbers around a lot, as we saw with this recent downgrade to 4%.

But I think it shows that in the short term, we have seen some pretty significant fiscal consolidation, but the long term still remains the open question. The CBO expects that over time, health-care costs in particular are really going to make that deficit explode again, and that's going to be potentially worrisome for the economy.

So the question is, now, can Washington take the slight lull and take the advantage of relatively low deficits and not having to worry about short-term issues as much to make some of those changes to entitlements to get the long-term spending under control and get the fiscal [situation] really on the right path for years to come. I'm not clear if that's going to happen or not, but even though we had an incredibly messy process to get to the short-term solution, it seems to have happened, and I think we can count on being able to come up with maybe not a grand way to do it, but maybe a messy process over the coming years in order to really get that long-term deficit under control, too.

Stipp: Something else that's coming down is same-store sales of Wal-Mart. Those are down 1.4%. Is this is a Wal-Mart story, or is this a consumer spending story?

Glaser: I think it's a little bit of both. On the consumer spending side, Wal-Mart's customers tend to be on the lower end of the income spectrum, and they've been hit particularly hard by those increases in payroll taxes, by high unemployment, and by stagnant wages. That gives them less purchasing power, and they have less money to spend at Wal-Mart. Slightly lower food inflation also has had a bit of an impact on their top line.

But Wal-Mart is facing intense competition from the likes of Costco and from Amazon that have been taking a lot of business as people see those as better value propositions sometimes. But that doesn't mean that you should count Wal-Mart out. They were able to keep their operating margins flat even with the pretty weak sales level, which I think goes to show their economic moat in action in that they are able to be a very low-cost provider. They even see sales moving to 0% to 2% in the Wal-Mart U.S. [segment] in the next quarter, so they don't see things in free-fall in any way, but their core customer continues to be under pressure.

Stipp: Negative 0.4% refers to the deflation that we actually saw in April from March prices. This gives the Fed a little bit more breathing room or elbow room.

Glaser: Inflation remains very benign. A lot of this is a decline in gas prices--a big decline in April from March levels--which drags that number down. When you strip out food and energy prices, which tend to be a little bit more volatile, we see a 0.1% increase in that consumer price index--not enormous inflationary pressures.

This, as you mentioned, gives the Fed probably more opportunity to continue their bond buying, continue in the mortgage-backed security market, and have a very easy monetary policy without worrying about those runaway price levels.

In fact, the Fed is probably very worried about deflation on some level. Bernanke is a student of the Depression; it's his area of scholarly research. He is worried about deflation, and if anything, if these numbers continue to look as weak as they have, or inflation looks to be as benign as it has been, it could give them fodder to actually increase the monetary operations a little bit in order to get that number a little bit higher.

Stipp: 30%, on the upside, is the stock price appreciation that Google has seen year-to-date. What's driving those great results?

Glaser: Google is innovating pretty well. They kicked off their Developers Conference this week, and Rick Summer, who covers Google for us, says it shows solid innovation.

Google didn't have any earth-shattering announcements. They are improving the Maps app; they are investing in their Play Store for Android to get people to buy apps and content directly from them instead of going to third-party stores, like maybe from Amazon or Samsung, and introduced a new music streaming service.

None of these on their own are going to really move the needle on earnings. But it shows that Google is being incredibly focused and disciplined in the way that they're investing and in getting more of a moat around their Android platform, and to make it clear that just Apple's iOS and their Android [platform] are going to be the two mobile systems. [They want to] try to keep Windows and keep any other players that might want to get in there out. They seem to be doing that very successfully right now.

The market has noticed this, though. It's not a big secret. We've seen that big run-up in price. The market cap is now over $300 billion, and our analyst thinks that the shares are trading a little bit above their fair value right now.

Stipp: Lastly, Jeremy, 15,000 is a milestone for the Nikkei. It's up over 70% over the last year. They are undertaking some extraordinary stimulus measures there. Is this a sign that they're working?

Glaser: Abenomics seems to be working in the short term. The new policies from the new Japanese prime minister have been putting Japan in a bit of a roll. We heard this week that their first-quarter GDP rose at an annual rate of 3.5%, which is a great number for Japan considering they've been in this mild recession, in and out of it, for an incredibly long time now.

The stock market passed that 15,000 benchmark. As you mentioned, it's up over 70% over the last year, which is a pretty incredible run for a developed-economy stock market. The policy of the Bank of Japan to double the monetary base has been effective in making the yen weaker against particularly the dollar, which should help Japanese exports and help keep that growth going.

The real question is, is this sustainable? Is this just a short-term stimulus-led growth that will peter out when the stimulus stops, when the Bank of Japan has to pull back a little bit? Or is this really the kick that Japan needed to get back on a growth track? I think as we get the answer to that question, we will have a lot of potentially interesting implications for Europe and for the United States about what kind of unconventional measures actually are effective in getting out of a slow-growth world. How do you do that? How do you exit from that?

It's a real experiment going on there, and I think one that's going to be watched closely by central bankers and other policymakers across the globe.

Stipp: So some things down, some things up and up big. Thanks for joining me again this week, Jeremy.